Articles published in May, 2017

Language matters. Any poet can attest to that, as can any lawyer. (One recent court case in the US turned on an ambiguity created by a missing comma.) But it’s less clear that we economists have realised how important it is to write clearly.
One who has is Paul Romer, the Chief Economist of the World Bank. Mr Romer has provoked a staff rebellion by instructing his large team of research economists to sharpen up their language. He’s threatened to block publication of a flagship report if more than 2.6 per cent of the words in it are “and”. Such medicine seems to be too strong for the World Bank: Mr Romer keeps his job title but is to be stripped of his managerial responsibilities.
No doubt the amusing surface of this story hides tedious depths of office politics. But Mr Romer has a point: economists seem to be drawn to obfuscatory polysyllables like wasps to jam. This is true even when compared to other academics, and even in a medium that encourages brevity: Twitter.
Recently economist Marina Della Giusta and colleagues at the University of Reading conducted an as-yet-unpublished linguistic analysis of the tweets of the top 25 academic economists and the top 25 scientists on Twitter. (The top 3 economists: Paul Krugman, Joseph Stiglitz, and Erik Brynjolfsson; the top 3 scientists: Neil DeGrasse Tyson, Brian Cox, and Richard Dawkins.)
Della Giusta and her colleagues found that economists tweeted less, were less likely to mention other twitter users, and mentioned fewer people when they did. This implies that the economists were less likely than the scientists to have Twitter conversations, especially with people they didn’t know. I can’t say I blame them; I avoid using Twitter as a medium for conversation myself. Still, the scientists managed it and the economists did not.
The economists also used less accessible language with more complex words and more abbreviations. Both their language and their behaviour was less chatty than that of the scientists.
The Bank of England has been pondering this kind of thing, too. Last year on Bank Underground, a blog for Bank of England staff, analyst Jonathan Fullwood compared Bank of England reports to the writings of Dr Seuss.
Mr Fullwood’s analysis uses statistical measures of writing complexity: long words, long sentences and long paragraphs make for more difficult prose. The Cat In The Hat stands at one end of the scale; Bank of England reports stand at the other. Mr Fullwood suggests that this complexity is not a good thing – and his work has been praised this week by Minouche Shafik, who recently left the Bank of England to run the London School of Economics.
We economists should write simpler, clearer prose if we want anybody to pay attention to what we think. But at the World Bank, Paul Romer has another mission. He has long argued that economists need to write clearly to help them think clearly. He also believes that trust depends on clarity. If we economists write prose that sounds complicated but does not tie us down to meaning anything in particular, we cannot be surprised if nobody trusts us.
Mr Romer is much taken by a linguistic analysis from Stanford’s Literary Lab. The analysis, published in 2015, tracks the development of “Bankspeak” in World Bank annual reports since 1948.
These reports once described specific situations (“Congo’s present transport system is geared mainly to the export trade”) and what the World Bank had done to improve them. Now they more likely to be clouds of feelgood bureaucratese, in which nothing specific ever happens. Projects “are emerging” while “players” are “partnering”. The result is somewhere on the Venn diagram between unobjectionable and incomprehensible.
When I worked at the World Bank, in the early 2000s, I first heard the phrase “Christmas Tree” used to bemoan work sagging under the pet ideas that had been loaded onto it. This explains Mr Romer’s irritation at excessive use of the word “and”. The Stanford analysis has a prime example of a Christmas tree from the 1999 annual report, which wants to “promote corporate governance and competition policies and reform and privatize state-owned enterprises and labor market/social protection reform…”
Such sentences are written by committee. It is surprisingly easy to write like this when you don’t know what you think, or cannot agree, or dare not say.
Mr Romer knows what he thinks and has never been afraid to say it. His focus on clear language can do little harm. It may even do some good, although I fear that too many “ands” are the symptom but not the cause of the trouble.
We should all aspire to write a bit more like Dr Seuss. If we write more clearly we tend to think more clearly. Since what we say is easy to understand we must make sure that it is true.
But simplicity alone will not save us.
“We’re going to build a big, beautiful wall and Mexico is going to pay for it,” has the same simple tone as Dr Seuss, although it lacks his compassion. Does it reflect clear, trustworthy thinking? I do not think so, Sam-I-Am.

My new book is “Fifty Things That Made The Modern Economy” – coming soon! If you want to get ahead of the curve you can pre-order in the US (slightly different title) or in the UK or through your local bookshop.

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The UK election has thrown up an intriguing idea. In a modern twist on the old offer of bread and circuses, Jeremy Corbyn’s Labour party has proposed four new public holidays — nearly a full working week’s worth. Since England and Wales currently have only eight such holidays, it would be a dramatic expansion in mandatory fun.

I like a holiday as much as the person in the next deckchair, but such days off are not costless. As any freelancer can attest, if you work less you earn less. Having a steady job with a monthly salary will hide that cost, but it’s going to pop up somewhere. Perhaps workers will receive lower pay rises. Or perhaps jobs will be lost. (Robots demand no holidays.)

But maybe these holidays would pay for themselves. A popular conceit is that many of us work inefficiently long hours, and that more vacations or shorter shifts would actually raise productivity. We can call this the “work smarter, not harder” theory of labour.

Exhibit A: The French. We British scoff at the French work ethic of four-day weekends and four-hour lunches, but the joke is on us, since the French get more done in less time. Nor are the French unique in this respect. Broadly speaking, countries with a culture of long hours are also countries with a record of low productivity per hour. According to the OECD, the Paris-based club of mostly rich nations, the longest hours in Europe are worked in Greece, closely followed by Poland, Latvia and Portugal. At the other end of the spectrum are the Danes, Dutch, Norwegians and French. Laziest of all? The Germans.

The most likely explanation for this pattern is that people in richer nations can afford the luxury of working fewer hours per year. But it’s tempting to speculate that causation runs the other way, and that short shifts and long breaks are a route to high productivity. No wonder that from time to time some think-tank or pundit proposes a six-hour working day — or a pilot scheme goes well and gets some buzz. On the face of it, it is not absurd to suggest that the British could enhance their lacklustre productivity by taking a few extra days off.

But there is an obvious objection to the idea. If a four-day week is just as productive as a five-day week, or a six-hour day beats an eight-hour day, then why don’t more employers embrace shorter hours? If it was such a good idea there would be no need for the government to impose it on anyone. It’s not impossible that the Labour party knows more than British managers about how best to run British businesses, but nor is it likely.

There is an alternative argument for the government to introduce more holidays: the hockey helmet problem. Nobel laureate economist Thomas Schelling pointed out in his 1978 book Micromotives and Macrobehavior (US) (UK) that ice hockey pros wouldn’t voluntarily wear helmets, despite the risk of horrendous injuries, because the helmets reduced visibility and put them at a disadvantage. Yet many were happy when the helmets became compulsory, offering safety without a loss of competitive edge.

Perhaps public holidays are like hockey helmets — we could usefully take time off but dare not, for fear of losing ground on our rivals. In 1998, economists Sara Solnick and David Hemenway surveyed Harvard students and found they would rather have $50,000 in a society where others were poorer than $100,000 in a society where others were richer. Students felt that money was a positional good, where what mattered was not how rich you were, but whether you were richer than others.

The Solnick/Hemenway study reached different conclusions about vacation time. The positional view — that what really matters is not how long your holiday is, but that your holiday is longer than other people’s — seems absurd. But if we’re competitive about money but not competitive about holidays, no wonder we work hard. A mandatory holiday gives every rat in the rat race a chance to catch its breath.

Even if you believe this argument for obligatory holidays — I am not sure I do myself — a final question awaits any government bold enough to introduce them. Why name a particular date? Holidays are easier and cheaper to take if other people are still working. But the Labour proposal actively emphasises national unity: we’re all to take the day off at the same time. The Scots will holiday alongside the English on St George’s day while the English return the compliment with a holiday on St Andrew’s day. Well, it might work.

But perhaps we should use holidays not to unite us, but to keep us at a safe distance from each other. We could introduce a patchwork of new holidays. Remainers could go on mini-breaks to Paris every June 22, while the Brexiters would gather on the white cliffs of Dover with warm bitter and ploughman’s lunches each June 24. A similar system in the US would spare liberals and conservatives from having to talk to each other. It seems to be the way we’re all heading, anyway — and it would be much easier to get some space on the beach.

My new book is “Fifty Things That Made The Modern Economy” – coming soon! If you want to get ahead of the curve you can pre-order in the US (slightly different title) or in the UK or through your local bookshop.

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Nobody ever mastered a skill by reading books – with the possible exception of reading itself. But books can help. Below are a few that I’ve found helpful over the years. But first, a few observations.

First, a good speech needs to have a purpose. All too often people view speeches the way my daughter sometimes views her school homework: “I’ve got to write an essay about the Henry VIII and the dissolution of the monasteries, and it’s got to be at least two pages long.” “I’ve got to give a talk about information security and it’s got to fill 25 minutes.”

If that’s how you look at things, you’re well on your way to a tedious speech. The starting point will be to sit down with a piece of paper (or worse, to fire up PowerPoint) and start listing all the things you can think of that might fill the void.

Instead, start with the question, “what’s the one thing I want people to learn, or feel, or do, as a result of hearing this?”. Everything else – jokes, stories, visual aids, supporting arguments – flows from that.

Second, deliberate practice helps. Each good speech you give tends to improve every future speech: set yourself the task of giving a truly sensational talk just once in your life. You’ll learn a lot. And when you’re preparing for a speech, practice in front of the mirror, or record yourself on your phone, or recruit a friend to listen. Yes, it’s painful, but even one run-through will make an enormous difference.

Third, distinguish between your speaking notes, your handouts, and your visual aids, and decide whether you need any of them. Your speaking notes are a series of bullet-point prompts; PowerPoint is a perfectly decent tool to generate these but they should be on 3×5 inch cards in your hand, not projected on the screen behind you. Your handouts provide a reminder of what you’ve said, or references, further reading, extra detail. You may not need them at all, but if you do, this is the place for the small print and the footnotes – not on the screen. The only thing that should go on the projector screen is the bona fide visual aid – a graph, image, movie or diagram that makes a genuine contribution to the purpose of your speech (remember that?). If no visual aid is appropriate, insert a blank slide or press “B” or “W” to turn the screen blank black or white.

Okay – lesson over. Here are my recommendations.

The single best book on public speaking I’ve ever read is Chris Anderson’s TED Talks (UK) (US). I reviewed it here; my only caution about the book is that it’s focused on giving the talk of your life. Anyone looking for quick tips to perk up the monthly sales meeting won’t find them here.

A great companion to Anderson’s book is Jonathan Swabisch’s Better Presentations (UK) (US). This is a workmanlike book aimed at academics, and covers all the basics – structure, visual aids, delivery. It’s smart and comprehensive and even an experienced presenter will learn a thing or too.

A more touchy-feely effort is Garr Reynolds’s Presentation Zen (UK) (US). Contains lots of good advice, wrapped up in all kinds of talk about “mind of a swordsman” and “being present”. It would annoy some people but it’s actually full of good advice.

If you want to do the McKinsey slide-deck thing with 50 data-packed slides, but do it well, I would suggest Gene Zelazny’s Say it With Charts (UK) (US). This is not the way I present, but it is appropriate for some contexts.

Finally, good advice on design in general, which will perk up any slide, comes from The Non-Designer’s Design Book by Robin Williams (UK) (US).

My new book is “Fifty Things That Made The Modern Economy” – coming soon! If you want to get ahead of the curve you can pre-order in the US (slightly different title) or in the UK or through your local bookshop.

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With hindsight, the timing was awkward. PRWeek had barely engraved Oscar Munoz’s name on the trophy before the chief executive of United Airlines and Communicator of the Year 2017 was engulfed in a spectacular public relations crisis. The airline had summoned the police to throw David Dao out of the seat he had paid for; the police broke his nose and knocked out two teeth; and Mr Munoz’s first response was to criticise Mr Dao and apologise to the other passengers. At least the PRWeek award has a glorious future as the answer to a pub quiz question.

I’m not even sure this qualifies as the award that turned out to seem the most ridiculous. The American Institute of Architects honoured the Kemper Arena in Kansas City with a national honour award, and then held its annual convention there in 1979. Alas, the roof of the arena collapsed a few hours after the architects’ convention left the site.

Tempting as it may be to mock the judges who hand out such prizes, having a more objective benchmark for achievement does not confer immunity. Just ask Claudio Ranieri, the football manager who masterminded Leicester City’s underdog triumph in the English Premier League last year. As soon as the points dried up, Mr Ranieri was sacked.

Why does life seem to deliver such strange reversals? The first explanation is simple but easy to miss: there are a lot of awards in the world. Many of the people or organisations notable enough to make news when they screw up will also be notable enough to have won a prize that will prove embarrassing.

The second explanation is more subtle: for statistical reasons, outstanding performances tend to be followed by something less impressive. This is because most performances involve some randomness. On any given day, the worst observed outcomes will be incompetents having an unlucky day and the best observed outcomes will be stars having a lucky day. Observe the same group on another day and, because luck rarely lasts, the former outliers will not be quite as bad, or as good, as at first they seemed. This phenomenon is called “regression to the mean”.

If you place a speed camera beside a stretch of road where the accident rate has been exceptionally high, the accident rate is likely to fall. But a garden gnome in the same place will also seem to save lives. That is because exceptionally high accident rates are partly the result of bad luck. While the speed camera may encourage safer driving, unlucky driving will tend to disappear whether it is treated with a camera or with a gnome.

Daniel Kahneman, psychologist and winner of the Nobel memorial prize in economics, was advising the Israeli air force when he noted a memorable example of how regression to the mean can mislead us. A flight instructor told Mr Kahneman that when the instructor praised cadets for a skilful landing, they usually did worse next time; when he bawled them out for clumsiness they tended to improve. The instructor concluded that harsh criticism worked; Mr Kahneman pointed out that a more likely explanation was sheer chance.

“Because there is regression to the mean, it is part of the human condition that we are statistically punished for rewarding others and rewarded for punishing them,” Mr Kahneman wrote. PRWeek now knows what he meant.

Regression to the mean probably explains why many award winners subsequently disappoint. And the disappointment will be spectacular if some people are taking bigger risks than others. The most impressive performance may combine skill with luck. In a financial market — or a casino — the easiest way to become an outlier is to make a big bet. Unfortunately, there is no way to be sure whether you will be an outlier on the upside or the downside. Treading a different path is a good way to look spectacularly right, or spectacularly wrong — or, given enough time, both.

While randomness can explain much, hubris may also play a role. A few years ago, the economists Ulrike Malmendier and Geoffrey Tate examined what happened to companies whose chief executives won accolades such as Forbes’s “Best Performing CEO” or BusinessWeek’s “Best Manager”. Ms Malmendier and Mr Tate picked a statistical control group of nearly-men and nearly-women who might have been expected to win an award, but did not.

Like the near-winners, the winners ran large, profitable companies. But those run by the winners did far worse in the three years following the award, lagging behind the near-winners by about 20 per cent. The prizewinning CEOs nevertheless enjoyed millions of dollars more in pay. They were also more likely to write books, accept seats on other corporate boards and improve their golf handicap.

Winning a prize may strengthen the hands of already dominant CEOs, enabling them to extract more money from shareholders and distracting them with the opportunity to write self-congratulatory books. Right now, I doubt that anyone is rushing to offer Mr Munoz an advance for his management insights.

My new book is “Fifty Things That Made The Modern Economy” – coming soon! If you want to get ahead of the curve you can pre-order in the US (slightly different title) or in the UK or through your local bookshop.

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We live in an age of unrelenting change. That, at least, is what we are told by a consulting industry that thrives on a gospel of disruption, and journalists who overgeneralise from the earthquake in their own profession.

Anecdotal evidence of volatility is easy to find: the financial crisis; the cultural dominance of inventions such as Facebook (barely a teenager) and the iPhone (younger still); the rise of fringe political parties and a maverick president.

But the statistical evidence for disruption is less compelling. The most straightforward evidence of that is low productivity growth in many advanced economies. If the pace of change is really so frenetic, how come we don’t see it in the productivity statistics?

One obvious measure of volatility would be the frequency with which people change jobs. When I entered the UK labour market in the late 1990s, the received wisdom was that a job for life was a thing of the past. Yet typical job tenure is longer today than it was then. People are choosing to move between jobs less frequently.

This is true both in the UK and in the US. In a 2015 study of the UK labour market for the Resolution Foundation, a think-tank, Paul Gregg and Laura Gardiner found a striking fall in the tendency of people to move from one job to another. In the 1990s and early 2000s, about 3-3.5 per cent of people with jobs would leave them each quarter in favour of new jobs. During the financial crisis that rate fell to well below 2 per cent. It has rebounded since, but is still far below historical norms. The decline was particularly pronounced for the under-thirties.

Why does this matter, if people have jobs? It matters because, as Mr Gregg and Ms Gardiner point out, moving from one job to another often means a promotion and a substantial pay rise. When people — especially young people — find themselves in the same job for year after year, there comes a time when we no longer call this stability. We call it stagnation.

In the US, there is a similar story to be told — a long-term decline in job-to-job transition rates that cannot simply be explained away by a change in the demographics of the workforce.

A parallel trend in the US is the decline in geographical mobility. The percentage of Americans moving from one state to another in a particular year has fallen by about half since 1990 — a striking fall, and one that seems surprising given the standard narratives of a scattered and atomised society. If it’s really true that Americans don’t know their neighbours any more, then they must be working hard to avoid them, because they have those neighbours for far longer than once they did.

Perhaps we fear change more than ever. Tyler Cowen’s new book The Complacent Class (UK) (US) argues that America has become less adventurous in many ways. An album from two decades ago would sound just fine to modern ears; films wrap new special effects around well-worn plots and characters. The chief expression of our cultural courage now is to eat at a trendy new restaurant. Ethiopian or Peruvian cuisine may offer delicious fresh flavours but it is hardly a force for cultural revolution.

Mr Cowen’s argument is fascinating. But one need not invoke culture to explain the stasis in the job market. A 2016 paper from economists Mike Konczal and Marshall Steinbaum argued that the main reason people don’t quit or move to find good jobs is because there are fewer good jobs available. If companies were hungry for talent, but people were reluctant to move, wages should be soaring in a scramble to persuade them. In most industries, they aren’t.

A more upbeat account, at least superficially, comes from economists Greg Kaplan and Sam Schulhofer-Wohl. They point out that, thanks to the internet, people can find the perfect job in the perfect place and never need to move again. (The same logic implies that dating apps reduce the number of fruitless first dates. I am not sure anybody believes that.)

But Messrs Kaplan and Schulhofer-Wohl also note that economies are now more homogenous than once they were. When once people would move to Michigan to build cars, or to coastal ports to work on the docks, now every job is a service-sector job. Whether you flip burgers or perform brain surgery, you can work in any state, so there is no strong need to move.

This is plausible, but it is also sad. It suggests that given the ability to move anywhere, we stay put. I am reminded of a study of college friendships conducted by psychologists Angela Bahns, Kate Pickett and Christian Crandall. They found that students in a large, diverse campus sought out and befriended other students very much like themselves. In smaller universities with fewer friendship options, young people had more varied groups of friends because the alternative was to have no friends at all. Our bias towards the status quo is not new — but perhaps we are taking advantage of new opportunities to indulge it.

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Better Presentations (UK) (US) by Jonathan Schwabish. This is the book you need to substantially improve the run-of-the mill presentation you were going to give anyway – in contrast to Chris Anderson’s excellent TED Talks (UK) (US) book, which is about how to give the talk of your life when you have all the rehearsal time in the world. Schwabish runs through all the key topics – visual aids, slide design, structure, etc. – and is packed with practical advice. Strongly recommended.

How to be a GURPS GM by Warren Wilson. If you have no idea what that means, don’t bother clicking. But it’s a very good book – aimed at beginners but full of useful advice.

Alex Bellos and Edmund Harriss have published Visions of Numberland (UK) (US) – which is a mathematical colouring book. I know, I know. But it’s rather beautiful and there’s proper maths in it. Enjoy!

Elsewhere

William Baumol has died before receiving the Nobel memorial prize that many economists felt he deserved. “A Fine Theorem” has an excellent appreciation.

The FT Management podcast has challenged FT writers to nominate and discuss “books to help in turbulent times”. Some people have picked management books, some have picked classic novels. I was rather literal, I’m afraid, and went for the excellent Designing Your Life (UK) (US). You can subscribe here; I think I’m up next, on Friday.

In 1929, the great economist Irving Fisher found his fortune and reputation ruined by his utter failure to forecast the great crash. Rival forecaster Roger Babson commented, not without sympathy, that Fisher’s problem was that “he thinks the world is ruled by figures instead of feelings”.

What a pitiable error. And it’s a warning to economists like me. We like to believe that the numbers speak for themselves, but the political world prefers to think with its gut. Nowhere is this more true than in the case of immigration, which economists tend to conclude is broadly a positive force. Politicians, aware that the world is ruled by feelings, tend to view immigration as something closer to a series of prison breaks: if you can’t get a grip on it, apologise and resign.

Immigration was a centrepiece of Donald Trump’s “build the wall” election campaign. It is a stated reason that the British government intends to go well beyond the referendum result and leave not only the EU but the single market. Immigration inspires strong feelings, and those feelings aren’t of happiness and gratitude. That is a shame.

Is there a gut-based case that we should be grateful to immigrants? I’d like to think so. Perhaps we should start with the golden rule of “do unto others”. It has a clarifying effect on our thinking about immigrants — or “expats”, as the golden rule suggests we call them, since that is what we call ourselves if we go to live overseas. The words are synonyms but the difference in perspective and respect is enormous.

The golden rule quickly exposes much of the talk about immigrants — expats — as hypocrisy. One popular idea is that immigration should be based on some kind of “points” system — or as the White House describes it, “merit-based” immigration. It seems reasonable. But not for a moment would we think of telling someone they couldn’t move from Detroit to Dallas because they “lacked merit”. Vox columnist Matthew Yglesias observes that he wouldn’t get away with describing white Americans without college degrees as people “without merit”. Quite.

Another seductive folly is the idea that the authorities should in their bureaucratic wisdom decide how easy it would be for different industries to recruit workers. As migration expert Madeleine Sumption has recently pointed out, an attempt to fine-tune the labour market through immigration policy might seem attractive, but it would require an extensive and expensive bureaucracy that would swiftly be surrounded by eager lobbyists. We need only ask how we’d feel if such a policy applied to us, with a Whitehall department deciding whether Cambridge required another software engineer.

We might also think that concerns about the “brain drain” were not a persuasive reason to force people from Leicester to stay there on the grounds that Leicester needs their skills. All these policies have managed to pass as moderate, sensible and even compassionate when applied to foreigners. The instant we ask if we’d apply them to ourselves we see them for what they are: a ludicrously cumbersome attempt at economic planning, and a woefully illiberal way to treat human beings.

There are many analyses of the costs and benefits of immigration. What’s not widely appreciated is that most of them simply ignore any benefits to the migrants — expats — themselves. Given this handicap, it’s striking that many serious studies find some modest net economic benefits. If I told you that a school or a hospital could pass a cost-benefit test even after ignoring the benefits to the pupils or patients, you might reasonably conclude that the school and hospital were impressive organisations. You’d also tell me it was a very strange way to do cost-benefit analysis.

In 18th-century France, workers had to show their papers to get permission to move from one town to another. The objection wasn’t that immigrants might arrive. It was that valuable workers might leave.

The French nobles were on to something. In most circumstances we’re keen to live close to other people. Densely populated areas tend to be richer, more productive, and more innovative. Because housing is compact and people travel on public transport, cities are also more environmentally friendly. And we know that cities are desirable places to live because people are willing to pay so dearly to live in them. Usually we view other people as customers, colleagues, and friends. From the church to the high street to the nightclub, other people are the lifeblood of our communities. It is only when we call other people “immigrants” that they seem to cause such anxiety.

I think we should be more grateful to the people who have the courage and energy to leave their homes and make a life somewhere new. But perhaps I’m the one who should be more grateful. As the economist Paul Seabright observes in his 2004 book The Company of Strangers (UK) (US), we humans are the recent descendants of shy, murderous apes. Somehow we have figured out a way to live together and co-operate. We have some way to go, but I am grateful for the progress we have made so far.First published in the Financial Times on 7 April 2017.

My book “Messy” is available online in the US and UK or in good bookshops everywhere.

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I’m re-reading The Lady Tasting Tea (US) (UK) – which is a fascinating history of statistics by David Salsburg, and Daniel Kahneman’s Thinking, Fast and Slow (US) (UK) – which is just full of interesting ideas.

Also Designing Your Life (US) (UK), the 21st century answer to the evergreen What Color Is Your Parachute? (US) (UK) Both are remarkable and humane careers guides. Parachute helped me a great deal twenty years ago. Designing Your Life has some fascinating new ideas for figuring out what you really want to do with your days, hours and minutes.